US Inflation Cools, but Oil Price Surge Puts Stocks Under Pressure

US inflation cooled for the second month in a row, easing fears that the Federal Reserve will raise interest rates next month and sending stock prices to record highs.

However, this relief was short-lived as oil prices surged, pushing bond yields to multi-year highs and causing stocks to pull back from their peaks.

The core inflation rate dropped to 2.5%, its lowest in five months, while the annual consumer price index rose just 3.4% in July, down from 3.5%.

This has reduced the market's odds of a September interest rate hike to around one in three, according to some estimates.